The interest rate for the 5-year fixed individual government bonds offered in November is 2.17%.
This is a 0.22% decrease from October’s 2.39%. The 10-year floating rate is also at 1.85%, returning from the 2% range to the 1% range. The upward trend that continued for three months since August has paused here.
In last month’s article, I wrote that ‘every time the 5-year fixed rate rises, the hurdle for the floating rate to win also rises.’ This month, the opposite is happening. In this article, I have broken down the Ministry of Finance’s announcement by the numbers and checked the difference from the estimates released on October 26. I have also calculated the net proceeds when purchasing 1 million yen worth.
1. Three numbers released by the Ministry of Finance today
On November 6, the Ministry of Finance announced the issuance terms for the November offering. The figures in parentheses are the interest rates after tax.
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10-year floating (200th issue) → Initial 1.85% (1.4741725%)
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5-year fixed (188th issue) → 2.17% (1.7291645%)
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3-year fixed (198th issue) → 1.94% (1.5458890%)
The subscription period is from Monday, November 9 to Monday, November 30. The issue date is Tuesday, December 15, and interest payments are made twice a year on June 15 and December 15.
The redemption dates differ for the three products. The 10-year floating bond matures on December 15, 2036, and the 5-year fixed bond matures on December 15, 2031. The 3-year fixed bond matures on December 15, 2029.
This month, the 1.94% rate for the 3-year fixed bond again exceeded the 1.85% initial rate for the 10-year floating bond. This is the third consecutive month since September. It is calculated that the money returned in 3 years will earn a higher interest rate than holding the 10-year floating bond.
2. How did 2.80% become 1.85%?
The interest rate for individual government bonds is calculated using a formula determined by market interest rates. The base interest rates for this month are written directly in the announcement materials.
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10-year floating → 10-year government bond auction yield 2.80% × 0.66 = 1.848%, which is 1.85%.
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5-year fixed → 5-year government bond expected yield 2.22% – 0.05% = 2.17%.
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3-year fixed → 3-year government bond expected yield 1.97% – 0.03% = 1.94%.
The base for the 10-year floating rate fell from 3.10% in October to 2.80%, a decrease of 0.30%. Since it is multiplied by 0.66, the interest rate is calculated to have dropped by 0.20%.
When market interest rates fall by 0.3%, the 10-year floating interest rate falls by 0.2%. Whether rising or falling, the movement is two-thirds of the market. This ‘two-thirds’ is a figure that will always follow you when holding a 10-year floating bond.
3. Difference from October. The 5-year fixed rate saw the largest drop
When compared with the October offering, the extent of the decline is as follows.
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5-year fixed → from 2.39% to 2.17% (-0.22%)
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10-year floating → from 2.05% to 1.85% (-0.20%)
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3-year fixed → from 2.07% to 1.94% (-0.13%)
The 5-year fixed rate, which rose the most in October, fell the most this month. This is the first time in eight months, since the March offering, that the 10-year floating rate has fallen below the previous month.
There are two reasons for this. First, the Bank of Japan kept its policy interest rate at 1.25% at its meeting on October 29-30. There was no consecutive rate hike following September, and the premium that had been built into the 5-year rate for the near future was removed.
The second reason is the sharp drop in interest rates on November 5. After the US midterm elections, oil prices fell, easing concerns about inflation. Long-term interest rates briefly hit 2.745%, the lowest level in about three months since late July.
This month’s interest rate was determined on that single day, November 5. The base for the 5-year and 3-year fixed rates, as well as the auction for the 10-year floating rate, were all on the same day. It just so happened that all three products were priced on a day when interest rates fell.
④ It was set 0.02–0.04% lower than the estimate on October 26
In the October 26 article, I estimated the November figures using the interest rates from October 23. I will compare those numbers with today’s announcement.
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5-year fixed → Estimate around 2.21%, actual 2.17% (-0.04%)
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3-year fixed → Estimate around 1.97%, actual 1.94% (-0.03%)
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10-year floating → Estimate around 1.87%, actual 1.85% (-0.02%)
The direction for all three products, ‘lower than October,’ was correct. The discrepancy is 0.02–0.04%, with the actual figures being on the lower side in all cases.
The reason for the discrepancy is the movement of interest rates rather than the calculation benchmark. The base for the 10-year rate went from 2.837%, used in the estimate, to 2.80% in the November 5 auction. The base for the 5-year rate was also 2.22% in reality, compared to the 2.26% estimate.The fact that interest rates fell further during the two weeks from October 23 to November 5 is reflected directly.
In the previous estimate as of October 19, the 5-year fixed rate was around 2.28%. It has gone from 2.28% to 2.21% to 2.17%, falling each time I made an estimate. An estimate is a figure based on ‘if interest rates remain as they are that day.’ Since it is impossible to predict market movements up to the decision date, the best way to use it is as a guide for direction and range.
[25] Individual government bonds, if you buy in October – Next month’s 5-year fixed rate is expected to fall from 2.39% to around 2.21% –
⑤ How much will the take-home amount change for 1 million yen?
If you buy 1 million yen of 5-year fixed bonds, the semi-annual interest is 1 million yen × 2.17% ÷ 2 = 10,850 yen. After deducting 20.315% in taxes, the take-home amount is 8,647 yen.
I have compared the total take-home amount for 10 payments over 5 years with previous offerings.
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November offering (2.17%) → Total take-home amount approx. 86,470 yen
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October offering (2.39%) → Total net proceeds approx. 95,230 yen
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September offering (2.24%) → Total net proceeds approx. 89,250 yen
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August offering (2.06%) → Total net proceeds approx. 82,080 yen
The difference from October is about 8,760 yen. A one-month difference resulted in a gap over five years equivalent to about one family meal out. However, compared to August, it is about 4,390 yen higher, so it is still at a higher level than in the summer.
I bought the 5-year fixed rate bond from the August offering using the Japan Post Bank app, and I have continued to buy them in portions every month since. I bought more of the October issue than usual. Compared to this month’s 2.17%, I ended up holding a larger amount at a higher rate. However, you never know which month is the peak until it is over.Buying in portions every month is a strategy based on the premise of this “uncertainty.”
Another point to note is the timing of interest payments. Since they are issued on December 15, the first interest payment will be on June 15, 2027. Even if you apply in November, the interest will not be paid for more than half a year.
The details on where interest is paid and the mechanism of the 20% reduction in net proceeds are summarized in [18]. I have also included the amount deducted for early redemption after one year.
[18] If you buy 1 million yen in individual government bonds, when and where is the interest paid? — Your net proceeds will be reduced by 20%
⑥ The line where the floating rate catches up has approached 3.29%
To determine how high the 10-year government bond yield needs to rise for the 10-year floating rate to catch up to the 2.17% of the 5-year fixed rate, the calculation is 2.17 ÷ 0.66 = 3.29%.
This line was 3.12% in August, 3.39% in September, and 3.62% in October. This month it is 3.29%, which is the first decline in four months.
Since the base for the 10-year government bond this month is 2.80%, a further rise of 0.49% is required. In October, a 0.52% rise was needed, so the gap has hardly narrowed.Because both the 5-year fixed rate and the 10-year government bond yields fell together, the distance between the floating and fixed rates has not changed much.
⑦ Where to buy. And the name will change starting next month
Individual government bonds have the same interest rate regardless of which financial institution you buy them from. What differs is how you open an account and the effort required for the procedures.
If you are buying for the first time, the shortcut is to decide where to buy based on where your money is currently located. I have summarized the procedures for each location, such as the Japan Post Bank app or securities companies, here.
[Archived Edition] Guide to buying individual government bonds for the first time — Choosing based on where your money is
Note that this November offering will be the last one sold under the name “Individual Government Bonds.” Starting with the December offering, it will become “Individual Government Bonds Plus.” Some corporations, such as educational institutions and condominium management associations, will also be able to purchase them. The product content will not change, and individuals can continue to buy them as before.
As a further review, the Ministry of Finance is also considering “compound interest types” and 20-year bonds. I crunched the numbers on these in my previous article.
“Compound interest type” and 20-year bonds for individual government bonds — A former bond department member uses a calculator to interpret the Ministry of Finance’s review proposal
Summary
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The November offering features a 2.17% rate for the 5-year fixed, 1.94% for the 3-year fixed, and 1.85% for the 10-year floating rate. All three products have seen a decrease.
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The reasons for this are the Bank of Japan’s decision to hold rates steady in October and the fact that pricing was set on November 5th, when interest rates fell due to lower crude oil prices. The final rates were 0.02% to 0.04% lower than the estimates from October 26th.
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The threshold for the 10-year floating rate to catch up has dropped to 3.29%. However, since 10-year government bond yields have also fallen, the distance remains roughly the same.
In months when interest rates fall, it is easy to hesitate and wonder, ‘Should I wait until next month?’ However, there is no guarantee that rates will rise or fall next month. Whether the net return of approximately 86,000 yen over 5 years on a 1-million-yen investment is sufficient for your money’s placement is a better starting point for deciding whether to wait or buy.
The offering period ends on Monday, November 30th. Online application deadlines may be earlier depending on the financial institution. It is safer to check the guidance provided by your financial service provider.
* Net returns are calculated by deducting 15.315% for income tax and 5% for resident tax, with amounts less than 1 yen rounded down.
* This article is based on announcements from the Ministry of Finance as of November 6, 2026. I am not a financial instruments business operator. This article is for informational purposes only and does not recommend the purchase of any specific financial product. Please make your own investment decisions.
Sources
Bank of Japan: ‘On the Conduct of Monetary Policy’ (October 30, 2026)
Ministry of Finance: ‘Expansion of Sales of Individual Government Bonds to Corporations, etc.’
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